Housing Finance in India: The Road ahead

Housing is a significant engine for growth and development of the economy. Housing constitutes an important component and a measure of the socio-economic status of people and it is a critical sector for the India growth story.

The disbursement figures available from NHB reflects a robust growth. From disbursement of Rs 23858.43 crore in 2001-02, the figures of disbursement was Rs 76819 crore in 2004-05. Figures for 2005-06 are expected to touch Rs 100000 crore!

The proportion of outstanding housing loans as percentage of GDP has increased from 3.4% in 2001 to 7.25% in 2005. However it also indicates the vast potential of growth when we compare the figures with that of USA ( 54%), UK (57%), European Union (40%), Thailand (17%), Malaysia (34%).

As per the Tenth Plan (2002-2007), the total number of houses that would be required was estimated at 22.44 million( 2.24 Crore)

Fiscal concessions provided to individuals under Section 80C (for principal repayment upto Rs 1 lac) and Section 24 B (interest repayment upto Rs 1.50 lac) continues to be a major attraction which reduces the effective rate of interest.

Now FDI is allowed upto 100 % under the automatic route in townships, housing, infrastructure and construction development projects. SEZs, which is the current rage, also will include world class residential premises.

Looks like a promising highway ahead!